Reliance may build 1.2 bn LNG terminal

The company had contemplated setting up the liquefied natural gas LNG import terminal as early as 1997. However,it later shelved plans for a 5 million tonnes per annum port terminal at Jamnagar for receipt of LNG transported from overseas via cryogenic ships and a plant for re-gasification of the liquid cargo.

The compelling reason for Reliance to re-evaluate the prospects for a LNG terminal was its inability to use the natural gas it produces from the eastern offshore KG-D6 field,as its twin refineries at Jamnagar have been allocated just 2.34 mmscmd out of the 60 mmscmd of gas that the government has earmarked for various users.

Reliance,the source said,is buying one LNG cargo a month from Royal Dutch Shell at prices that are in double digits,as against a delivered price of USD 7 per million British thermal units of KG-D6 gas.

A company spokesperson was not available for comments.

8220;Jamnagar is the natural choice,but Gujarat already has two LNG terminals at Dahej operated by Petronet LNG and Hazira owned by Shell India and Total of France. A third terminal is under planning stage at Mundra by Adani Group and Gujarat government entity GSPC and so a fourth one in the state looks unlikely,8221; the source said.

One of the options is to set it up at Kakinada,in Andhra Pradesh,following which the under-utilised East-West pipeline 8212; which connects the landfall point for gas from the eastern offshore KG-D6 field to Baruch in Gujarat 8212; can be used to move the fuel to the company8217;s plant.

The pipeline can move up to 100 mmscmd of gas,but only half of its capacity is currently being utilised on account of production constraints at KG-D6 field,which produces 54 mmscmd at present.

RIL is also considering the option of using a floating LNG facility that will receive cryogenic ships at high sea and regasify the liquid cargo into natural gas before piping it to shore through a submarine pipeline. 8220;The floating LNG terminal will take one-and-half years,compared to 36-40 months for a proper LNG terminal,8221; he said.

Sources said Reliance had also explored the possibility of picking up a stake in Adani8217;s proposed LNG terminal at Mundra,but the talks did not go anywhere as the two sides could not agree on capacity sharing.

Reliance had in 2000 tied up LNG imports from Iran,but later shelved the plan after it discovered huge gas reserves off the Andhra coast.

Reliance had in December,1997,got government approval to raise Rs 1,150 crore through the issue of global depository receipts or American depository receipts and through private placement to part-fund its proposed LNG receipt terminal at Jamnagar.

It had in May,2000,signed a deal with the National Iranian Oil Co NIOC for a 7.5 million tonnes per year LNG plant in Iran. Reliance was to take a 25 per cent equity stake in the USD 3.5 billion project and in return,get to take back home 2.5 million tonnes of LNG.

However,the plan was shelved in 2002 when Reliance discovered massive gas reserves in the KG-D6 field in the Krishna-Godavari Deepwater Basin,off the coast of Andhra Pradesh.

Last year,the company had expressed interest in taking on lease the LNG terminal adjacent to the Dabhol power plant.

It was one of the six firms 8212; along with Essar Oil,Indian Oil Corp IOC 8212; that expressed interest in tying up capacity in the 5 million tonnes per year LNG facility when it comes onstream sometime in 2011.

The other companies that expressed an interest in hiring the Dabhol LNG import facility on a tolling basis included NTPC and the GMR group.